The Australian Securities and Investments Commission (ASIC) will not be responsible for setting the new entrance-level financial advice exam if its latest proposal is accepted by the industry.
In the next phase of its consultation on the implementation of a national examination framework for financial advisers, ASIC has proposed that the development and administration of the exam be undertaken by a self-regulatory organisation (SRO).
It is important that the national exam is driven by industry
According to ASIC, a self-regulatory model, when implemented effectively, can be an efficient approach to establishing the exam. It would also give industry members the opportunity to jointly take responsibility for shaping their profession.
“Financial investors and consumers need to be confident and informed when planning for their future and having a national exam for financial advisers is an important part of making this happen,” ASIC Chairman Greg Medcraft said.
“It is important that the national exam is driven by, and developed with, industry.”
He added that ASIC would maintain a close relationship with the SRO because of its overall responsibility for standards in the retail advice sector.
The national examination framework was first proposed by ASIC in April 2011 (see: ASIC Delivers Education Proposal…). Under the framework, a new Financial Services Competency Certification exam would be introduced as a minimum entry level requirement for all financial advisers. This would be followed by a period of supervision by an experienced adviser, and an ongoing Knowledge Update Review every three years for all practising advisers.
ASIC says it would like to see the completion of the national exam introduced as a membership requirement for industry associations, or as a condition of employment for industry participants.
The FPA acknowledges that the current RG146 standard is below par
CEO of the Financial Planning Association (FPA), Mark Rantall, said the Association supported an improved standard for financial advisers, but felt the latest announcement from ASIC was unclear.
“We are eager to receive more information from ASIC on their proposal for a national exam for financial planners. There are a number of areas that need some clarification in the release issued (by ASIC), including the standards the proposed exam will meet and the proposal of a Self-Regulatory Organisation,” Mr Rantall said.
“The FPA acknowledges that the current RG146 standard is below par and agrees that a higher national standard needs to be set to build the trust of consumers.”
Mr Rantall added that the FPA’s existing entrance standards and CFP certification meant its members were already operating at a higher standard than RG146 and should be given relief from initial examinations.
The Association of Financial Advisers (AFA) was also supportive of the move to improve industry standards, and the proposed SRO approach. AFA CEO, Richard Klipin, said he believed the industry should be involved in setting its own professional standards, and looked forward to seeing further detail from ASIC.
However, he added that knowledge assessment alone was not the answer to creating a more professional industry. “The exam is only one element and should not be looked at in isolation. In its submission on CP 153 the AFA recommended a broader framework of professional development, including ethics and behaviours, and we will continue to discuss these issues with the regulator,” he said.
ASIC says it will engage further with industry participants on the introduction of an SRO over the coming weeks.
I totally object to exams testing knopwledge. I have completed a BComm and a MFinPlan and I maintain my competency as required by my membership with the AFA and my licensee. Why is our industry singled out whilst other professions get a free pass? Oh and I love the FPA’s position of their certified Fin planners should be exempt. Does this include the mnay thousands who were gradfathered in?
You may be correct, but why turn this into another ‘us and them’ between the AFA and FPA. Moreover why stir up that old debate about greater or lesser CFP designates. Ongoing CPD (required by any of the relevant professional associations)should be sufficient to prove the competancy of all. If not the CPD requirement should be increased or restructured. This would render annual exams redundant. PS: I am not a grandfathered CFP – just an interested observer.
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